In the upstream oil and gas industry, an orphan is a well, pipeline, facility or associated site that does not have a legally responsible and/or financially viable party to deal with its decommissioning and reclamation responsibilities.
The AER first investigates possible orphans to search for responsible parties before designating individual properties (wells, pipelines, facilities or sites) as orphans. If you have any questions or concerns about possible orphans, please contact the AER Customer Contact Centre toll free at 1-855-297-8311.
Funded primarily by industry, the OWA’s job is to close wells, facilities and pipelines that do not have a solvent and responsible owner—known as orphans—to protect people and the environment, and remove the potential risk of unfunded liability. The OWA is an independent, non‐profit organization that operates under the delegated legal authority of the Alberta Energy Regulator (AER).
We are led by an independent Board of Directors with industry, regulatory and government representatives who oversee our operations, priorities and strategic planning.
The OWA is primarily funded by the annual Orphan Fund Levy, which is paid by the oil and gas industry in Alberta. The levy is based on estimated abandonment and reclamation activities for the upcoming year and is set by the AER in consultation with the OWA, the Canadian Association of Petroleum Producers, and the Explorers and Producers Association of Canada.
The AER allocates the Orphan Fund Levy to each oil and gas producer in Alberta based on their proportionate share of deemed industry liabilities as determined through the AER's Licensee Liability Rating Program and the Oilfield Waste Liability Program.
The OWA also receives funds collected by the AER through First Time Licensee and Regulator Directed Transfer Fees, which are paid by oil and gas producers.
In additional to regular funding through the Orphan Fund Levy, the Province of Alberta has committed a total of $335 million in repayable loans to the OWA, with a grant of $30 million from the Government of Canada to cover interest charges for the first $235 million. The remaining $100 million loan will also be interest-free for the OWA. The Government of Canada has separately supported our work with a $200 million repayable loan.
Compensation to landowners for unpaid surface lease payments from a defunct or insolvent company is not within the OWA’s legislated mandate. If you have any questions about applying to receive lease payments for your land, we encourage you to call the Land and Property Rights Tribunal (formerly, the Surface Rights Board) toll free at 310-0000, then 780-427-2444, or visit www.surfacerights.gov.ab.ca.
The OWA requires files to be sorted in boxes that are clearly labelled by well files, surface land files and engineering/pipeline/environment files. Please do not send mineral lease files, correspondence files or contract files. A list of the box contents is requested whenever it is available.
To contact us regarding files, please call (403) 297-6416.
We assess each orphan wellsite and prioritize it within our existing inventory to ensure public safety and environmental protection. We aim to complete decommissioning and remove equipment so that landscape and environmental reclamation work can begin within three years of receiving a site, although timing may vary depending on the complexity of the project.
After decommissioning is complete, reclamation and restoration of the site begins. Timelines for this process are also variable depending on environmental and landscape considerations.
Landowners receive an information package from the OWA if the wellsite on their land has been designated an orphan. The OWA also has a list of the orphan wells and reclamation sites updated monthly that can be downloaded from the Orphan Inventory section of our website.
If you have not received a letter from the OWA, it is likely that another party is responsible for the site. Please contact the AER at LiabilityManagement@aer.ca for more information.
While the OWA has the right to access the land under various orders and legislation, we understand that some landowners may have reasons they do not want us to undertake closure work. Where landowners deny access to their land, we will openly communicate towards a goal of mutual understanding that may lead to access. Where this cannot be achieved in a timely manner, the OWA will move on to other areas, and closure work on these sites will be delayed indefinitely. We are required to inform the Land and Property Rights Tribunal (formerly, the Surface Rights Board) that work will not proceed due to denied access. The Land and Property Rights Tribunal may use this information in determining what, if any, impact the access restriction will have on outstanding surface lease payments.
The Farmers Advocate has additional information that may be useful.
The OWA is facing an unprecedented rate of wellsites declared as orphans, which has made it necessary to direct funding toward direct decommissioning and reclamation. This approach allows us to remove orphan sites from the landscape as quickly as possible.
Typically, the OWA will not control weeds on orphaned sites until the site has been fully decommissioned. The OWA will control weeds during the reclamation stage of our work, and prior to applying for a reclamation certificate. We will control weeds prior to the reclamation stage only if we believe that failure to do so will significantly impact our pending reclamation program.
The OWA is unable to compensate landowners for unpaid surface lease rentals from a former operator. If surface payments are outstanding, you can contact the Land and Property Rights Tribunal (formerly, the Surface Rights Board) by calling toll-free 310-0000, then 780-427-2444 or visiting www.surfacerights.gov.ab.ca. While processing can take some time, the payments will continue until the site receives a reclamation certificate.
We make every effort to limit our work to areas covered by the previous surface lease agreement and to minimize impacts to areas outside the lease area. Should we need to use any off-lease area not covered by a former surface lease, the OWA will negotiate with landowners regarding additional compensation.
The OWA is only authorized to decommission and reclaim sites and assets that have been deemed orphans by the AER. Only wells and facilities that were 100% owned by a defunct company are turned over to the OWA. Any wells or associated infrastructure that are licensed to a defunct company but continue to have viable partners are the responsibility of those partners. These partners, also known as working interest participants (WIPs), are directed by the AER to perform the decommissioning and reclamation work. The WIPs can apply to the OWA to recover the costs attributable to the defunct company. For these locations, please contact the AER at LiabilityManagement@aer.ca
Any equipment associated with an orphan location becomes the property of the OWA and helps us to offset costs when it is sold. The OWA’s first priority is safety, so some of the equipment and piping on lease sites may need to be sampled or cleaned to ensure it can be sold. We will always work with landowners when there is lower-value, safe equipment that may be appropriate for release or sale. Other equipment may be purchased from the OWA through our salvage program.
The OWA works across the province. After risk-assessing and prioritizing our inventory to ensure public safety and environmental protection, we look for opportunities to bundle projects regionally to maximize efficiencies. We deploy Prime Contractors so that, wherever possible, they work on several projects in an area, approaching them as one larger initiative from a workforce and supply-chain view, regardless of the corporate holder of orphaned liabilities.
The work the OWA performs is through our Prime Contractors who act as our representatives in the field and are responsible for complying with OWA’s safety and other regulatory requirements. Prime Contractors conduct a competitive process for each package of work they receive from OWA to select their Subcontractors, who will perform part of the decommissioning, remediation and reclamation work where specific skills and experience may be needed. OWA reviews and approves the Subcontractor selection before any work is awarded.
Prime Contractors:
Prime Contractors manage the work site and are responsible for safety and the results. In summer 2020, the OWA completed a competition to add more Prime Contractors to our roster. This was in response to additional funding, in the form of Alberta and Federal Government loans, that the OWA received. We are not seeking additional Prime Contractors at the present time.
Subcontractors:
Subcontractors report to the Prime Contractor and are tasked with safely completing the decommissioning, remediation and/or reclamation activities assigned. For 2021 Subcontractors will be engaged in two ways:
For our Service Rig and Downhole Tools Pilot, rates sheets will be requested when shortlisted Subcontractors are invited to respond to the OWA Request for Quote (RFQ).
For other categories, our Primes will request a rate sheet when a Subcontractor competes for work.
To see a list of our prime contractors, please click here.
New for 2021, upcoming work will be posted on the OWA website under the Projects page. Please check back periodically. Email your questions to supplychain@orphanwell.ca.
